Investors are pulling money out of commercial property, and shares in housebuilding companies are falling fast.
Three big asset management
firms have halted trading in real estate investment funds in the last 24 hours,
the latest sign of turmoil since the U.K. voted to leave the European Union on
June 23.
The funds are heavily
exposed to offices and other prime commercial property that can't be unloaded
quickly enough when nervous investors want their money back.
Standard Life halted trading
in its fund on Monday because of "exceptional market circumstances."
Aviva Investors followed Tuesday, suspending its fund due to a "lack of
immediate liquidity." M&G Investments said it suspended trading in
M&G Property Portfolio because "investor redemptions have risen
markedly" since the Brexit vote.
Markets responded swiftly,
sending the pound to $1.30 against the dollar. It has fallen 13% since the
Brexit vote. Shares in building companies were also slammed, with Barratt
Developments, Taylor Wimpey (TWODF) and Berkeley Group falling between 6% and
9% in London.
All three have seen their
stock price plummet by more than 30% since the U.K. referendum.
Analysts say the tremors in
the property sector are being fueled by huge uncertainty about the economy
ahead of Britain's divorce from Europe, and the possibility that foreign
investors and companies might abandon the U.K.
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